Companies have environmental “blind spot” in supply chains: study

Vending machines selling a variety of drinks in Tokyo, Japan. Multinational companies like Coca-Cola are increasingly committed to cut the carbon footprints of their products, which it says two-thirds of it come from suppliers, such as packaging, agricultural ingredients, coolers and vending machines. Image: Sakarin Sawasdinaka / Shutterstock.com

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Many multinationals have a blind spot in judging the environmental impact of their suppliers’ operations, adding to corporate risks linked to climate change, according to a study published on Tuesday.

The report, by non-profit consultancies CDP and BSR working with 75 companies such as Dell, Unilever and Wal-Mart Stores on environmental risks, said that only 49 per cent of almost 8,000 suppliers responded last year when asked about their environmental footprint.

“If you are a large multinational company and you have a blind spot in your supply chain …, you are likely to be at greater risk,” Paul Simpson, head of CDP, told Reuters. CDP was formerly known as the Carbon Disclosure Project.

Still, he said it was positive that ever more multinationals were seeking environmental information about supply chains, such as greenhouse gas emissions, water use or the impact of their business on tropical forests.

Coca Cola, for instance, aims to cut the carbon footprint of “the drink in your hand” by 25 per cent by 2020 from 2010 levels. It says two-thirds of that footprint is caused by suppliers, such as packaging, agricultural ingredients, coolers and vending machines.

And Wal-Mart has said it achieved a goal of cutting 20 million tonnes of greenhouse gas emissions from its supply chains by 2015 - something impossible without proper monitoring.

The report did not name companies with good or bad overviews of their suppliers but Simpson said CDP would publish a ranking in 2017.

Last month, almost 200 nations agreed at a summit in Paris to phase out net greenhouse gas emissions this century to limit rising temperatures blamed for causing everything from more heat waves to downpours.

“Everyone is under starter’s orders including multinational organizations and their worldwide supply base” to implement the Paris agreement, Christiana Figueres, head of the UN Climate Change Secretariat, wrote in a preface to Tuesday’s report.